The Wonderful World of Free - and How it Can Work in Hotels

In the recent Hollywood comedy The Internship, a movie based on the unlikely premise of two guys on the brink of middle age landing internships at Google, there’s a scene where one of the main characters, played by Vince Vaughan, goes up to the counter at the infamous Google canteen and orders a coffee. When he asks the server how much he owes, he responds “it’s free”.

Vince Vaughan and Own Wilson in The Internship

“What about the bagel?”

“It’s free.”

“The muffin?”

“No charge.”

“The fruit?”

“It’s also free.”

It’s not a word for word transcript of how the conversation went, but the gist is there: Vince Vaughan’s character is in total awe of one of the reasons why Google has been voted one of the best companies to work at: the free food.

Free massages and other perks not withstanding, the free food canteen has become the employee-envy of choice for non-Googlers trudging to the pantry of their workplace every day to put their lunch box in the microwave.

But as said by others, the point of the canteen is not the wide variety of food that’s on offer, or that Google wants to spare its workers the daily distractions around what to eat at work. The point is the fact that, in stereotypical internet style….. it's all free.

It’s no secret that people like free stuff. Used as an adjective, Free is defined as “not under the control or in the power of another; able to act or be done as one wishes” but as an adverb it means “without cost or payment”. Combine the two - free of charge and free to consume - and you hit on something that is ingrained in our cognitive patterns which makes free stuff inherently and almost automatically attractive.

Of course, the label free is also a big fallacy and things that are offered for free almost never are. The free food and other perks at Google for example, are designed to foster employee loyalty, and I’m sure it works. There is no such thing as a free lunch, remember…

How Free can Work in Hotels

Given the powerful pull the label free has, I am surprised how little it is employed in hotels. Take movies, for example.

As I have pointed out before, the airlines have been doing a much better job with employing “Free” as marketing and branding tools by absorbing movie and other content costs in the ticket prices, meaning they are invisible to their customers.

Imagine the same customer who has watched two Hollywood movies “for free” on the plane over to Asia now checking in his hotel and discovering that the same range of movies will be charged at US$15?

In the age of BYOD, movie hit rates – specifically for Hollywood content – are suffering like never before, and fact is, that they won’t come back. So why not turn this trend into an advantage by offering Hollywood movies for free? The free-to-guest business model can be had for as little as US$5-6 per room and month (depending on the room count) which is surprisingly reasonable and can be a rounding adjustment, if absorbed in the overall room cost.

But even if not, the marketing and brand value is something not be sneered at. This kind of offering may not be for every hotel, but the hit rates for free movies in some of the more family-oriented hotels where our system has been deployed show a healthy viewership, indicating that it hits a soft spot with a certain demographic. This knowledge, if used wisely, can be a great loyalty driver.

Of course, not every feature or service can and should be free in a hotel. But a lot of hotel features move through a product life cycle that ranges from innovative to commoditised and a lot of times this matches the trajectory from chargeable to non-chargeable item.

Internet access/Wifi has already marched through this cycle and has arrived at a point where it is now expected to be free to guests. VOD is still at the beginning of the curve and hoteliers should move quickly to get the maximum brand and marketing value out of offering them for free before they, too, move to the commodity site of the cycle.

(Incidentally, I am writing this from my hotel room in Tokyo, a city where ‘free’ still seems to be a dirty word. Aside from the impossibility of finding cafes offering free wifi, my hotel initially insisted on charging me ¥2,100 (about US$20) for using the hotel pool. Only after repeated requests to explain the charges, the manager finally allowed me to ‘become a member’ which allows me free access…)

Is it the end of the Set Top Box as we know it?

Google managed to send the industry abuzz with chatter about the TV Set Top Box being ‘on its deathbed’ after it emerged the search company would axe the STB business it will inherit from acquiring Motorola for $12.5 billion. While Google’s prime motivation is likely to be that its Android OS is not compatible with current STB chipsets and technologies, the company most certainly can also see that the market for STBs in their current format is in decline.

The question where the STB is heading is an interesting topic that seems to pop up more and more frequently not only when discussing consumer equipment, but also regularly features high on the agenda of hotel IT managers, who may question the necessity of STBs to deliver in-room entertainment in the age of content anywhere and on any device.

It’s a fair question, particularly for someone who needs to make decisions about entertainment equipment that has to last a 5-year lifecycle. 

While there is no denying that the advent of connected devices is starting to seriously challenge the dominance of STBs, to put them on the ‘deathbed’ is in my opinion a little premature. The fact is that their inherent mobility and backward compatibility are yet to give STBs legitimacy and relevance for some time to come. 

Connected TVs are often seen as a prime challenger of the STB. All models more or less provide services including full web browsing, Wi-Fi connectivity, high-resolution graphics, Android apps and even console-quality gaming experiences. But the reality is that connected TVs also still rely on the good old STB – except that it’s inside the TV, rather than attached to it. So from a cost perspective, connected TVs will not necessarily make things cheaper: you either have to pay for an external STB with a casing, or an internal STB without it. The cost of these internal STBs can certainly be driven down to a certain extend due to TV manufacturers’ economies of scale. But they have to be paid for nonetheless.

And what about the content? In the long run it is imaginable that a majority of TV viewers will receive their content from the cloud, i.e. through OTT. But this requires the precondition that all household TVs are connected TVs and run compatible versions of Content Apps for Android, or iOS (if Apple ever comes out with their TV set).  The day may come, but the changeover period will be rather drawn out. It’s similar to the mobile world, where despite the smartphone craze there are still considerable numbers of users preferring to use a mobile just for voice calling and SMS rather than watching video.

A complicating factor for the hospitality industry is that it’s a secondary market for TV panel vendors who primarily target the mass consumer market and their needs and wants. Given that different TV models with different features raise backward compatibility constraints, the STB (or another piece of hardware) is still necessary to provide TV manageability for hotels for some time to come. 

Having said that though, a more interesting trend that we are seeing right now is that the tablet eco-system is starting to invade the STB eco-system.  As tablet chipsets get ever more powerful, and certainly more powerful than STBs, the stage is almost set for tablet technologies to challenge current STB technologies. That’s the philosophy behind AppleTV, whose “STB” is essentially an iPad without touch screen, but with a network port and HDMI interface.  

While you can be forgiven for dreaming about a future where Ethernet renders any hardware obsolete, it realistically will not happen for some years to come. It’s a paradigm shift that will take time to establish itself. 

So the reality is that for the foreseeable future there will be a piece of hardware that is involved in the delivery of content, whether we’ll call it an STB or not. But it currently it looks like that there’s a fair chance that the next generation STB will be a stripped down tablet.

Technology firms on ‘litigious rampage’ stifle consumer choice

After Apple filed 10 lawsuits in a variety of countries against Google, claiming patent infringement, it seems Facebook’s launch of a mobile web platform this week, which is a direct challenge to Apple’s (and others’) control of their ecosystem, may ring in another round of what some fellow bloggers call the company's "lawsuit rampage".

Of course you can argue that Apple just puts upon everyone else what has and is being put on them by others. A simple online search reveals the multitude of suits and countersuits, class actions, trademark infringements and even libel disputes the company has had to fend off over the years by anyone from the Beatles and patent trolls to consumers, resellers and, of course, competitors large and small.
 

While Apple seems to be the most active and gets most of the publicity lately, other tech firms are not slow to unleash lawsuits on anyone, particularly if it throws a spanner in the works of its competitors’ operations. Think about Oracle’s patent infringement lawsuit against Google over Java last year, or the 2009 action Skype’s ousted founders brought against eBay over key P2P technology that was not part of eBay’s purchase of the VoIP provider in 2005.

Technology as an industry is heavily dependent on innovation and in an increasingly saturated world even the smallest new feature can potentially mean a big difference on the balance sheet. It is understandable therefore that technology companies are concerned with protecting their assets. But I wonder if rather than spending time and money sparring – often in vain – with their peers, companies should concentrate more on delivering the products and services that attracted consumers to them in the first place.

One of the reasons tech companies increasingly choose a legal option may lie in the confusion between patents, which can include proprietary rights, and copyrights, which can’t, leaving a lot of room for interpretation. In addition, with business interests now firmly being played out on a global scale, different countries, court systems and their respective interpretations of law further muddy the waters.

Tech companies are of course not the only ones finding themselves facing a court room over copyright issues. The slipperiness of its definition was recently demonstrated when Australian band Men at Work lost a law suit that alleged their 1981 world smash hit “Down Under” ripped the signature flute riff off a popular ditty written in the 1930s. While as far as I am concerned the flute riff is as close to “Kookaburra” as Doris Day is to Rihanna, the courts had a different opinion and the band now has to hand over 5% of profits from the 1981 song to the publishers of the 1930s song.

Back in the tech world, one of the more interesting copyright decisions the courts have handed down over the years is actually Apple vs Microsoft concerning certain GUI elements. Apple lost on the grounds that the GUI elements were either unoriginal to Apple, or were the ”only possible way of expressing a particular idea”.

This bears certainly similarities to Apple’s current court clash with Samsung over the latter’s Galaxy tablet, which Apple says looks identical to its iPad. But Apple is not the inventor of the tablet computer and a touch tablet has to have a rather large screen as much as a car has to have a motor. And here’s the crux: It’s the difference in horse power under the hood, quality of materials used and varying ranges of gadgets available that not only make a car, but every technical device unique and recognisable. Apple so far has been exceptionally successful in transforming itself from an equipment manufacturer to a true entertainment company that owns almost its entire ecosystem. This, not sleek design or form factor, is first and foremost the reason why the company is such a trail blazer and the envy of every telco and equipment manufacturer that keeps struggling to move up the value chain.

Technology may be a vastly complex field when it comes to copyright and intellectual property issues. However as the users of the technology that’s being fought over just now, we have to ask ourselves what is in our best interest. As the saying goes, consumers win with competition and lose when competition is stifled, which is what these lawsuits essentially are aimed at.
 
Looking at how many suits got retracted or thrown out over the years on the grounds of being baseless, litigious companies’ actions increasingly look like vengeful tantrum throwing rather than serious attempts at minimizing purported commercial damage that is based on provable offences. As the creator of the Java technology Oracle and Google fought over last year put it so succinctly, these types of lawsuits are all about ego, money and power.

He’s got a point. With success rates for these types of lawsuits checkered, it is questionable whether the vast legal fees generated by them warrant the outcome. So when excessive lawsuits bog down the courts and new products are being kept away from consumers during lengthy appeals processes, the only winners – no surprises here - seem to be the lawyers.

What has all this to do with hospitality? Well, plenty. In a world where there is a chance that a particular technology, feature or piece of hardware may no longer be available and thus no longer supported poses a risk to providers and consumers alike. It underscores the importance of a flexible approach when deploying technology. Think about the anxiety Google’s purchase of Motorola Mobility continues to cause handset manufacturers that use Android as their O/S. Despite Google pledging its commitment to its handset manufacturing partners, I am sure some of them are looking at a plan B should Google claim the monopoly on Android for itself.

So designing your system as open as possible will go a long way to safeguard your technology platform against not only litigious companies and their well paid lawyers, but also against unexpected shifts in technology trends.